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Multiple Versus Single Overhead Rates, Activity Drivers Deoro Company has identified the following overhead activities,...

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Accounting

Multiple Versus Single Overhead Rates, Activity Drivers
Deoro Company has identified the following overhead activities, costs, and activity drivers for the coming year:
Activity Expected Cost Activity Driver Activity Capacity
Setting up equipment $499,840 Number of setups 640
Ordering costs 359,100 Number of orders 18,900
Machine costs 898,800 Machine hours 42,800
Receiving 481,500 Receiving hours 10,700
Deoro produces two models of dishwashers with the following expected prime costs and activity demands:
Model A Model B
Direct materials $611,000 $791,000
Direct labor 485,000463,000
Units completed 15,2007,500
Direct labor hours 6,9002,100
Number of setups 420220
Number of orders 6,00012,900
Machine hours 24,10018,700
Receiving hours 3,7007,000
The company's normal activity is 9,000 direct labor hours.Required:
Determine the unit cost for each model using direct labor hours to apply overhead. Round intermediate calculations and final answers to nearest cent.
Determine the unit cost for each model using the four activity drivers. Round your answers to nearest cent.
Which method produces the more accurate cost assignment?
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